MARKET REVIEW

Global. Asian markets ended lower as investors weighed a weak China Sep’s manufacturing PMI data as high raw material prices and power crunch pressured manufacturers, while the services PMI returned to expansion as the Covid-19 outbreak receded. The concerns over the debt-ceiling impasse in Washington and Evergrande’s debt woes added to investor worries.

On the back of a third-weekly rise in jobless claims and ahead of the key US consumer spending, inflation and factory activity data tonight, the Dow skidded 547 pts or 1.6% to 33844. Despite approving a stopgap spending bill to keep the government running (until 3 Dec), bearish sentiment prevailed as lawmakers remain at a stalemate over plans to raise the debt ceiling, to avoid the government defaulting on its obligations by 18 Oct whilst Biden’s USD3.5tri infrastructure bill is still in reconciliation stage.

Malaysia. In line with regional markets, KLCI fell 10 pts to 1537.8, as declines in telcos, metals, O&G and banking stocks coupled with strong foreigners’ selldown (the largest net selling in two months amounting to -RM207m) had taken a toll on the local bourse. Market breadth remained negative for a 5th session as the losers edged the gainers by 530-to-458 stocks. Local institutions were the only net buyers amounting to RM211m, recording their biggest net buying in two months whilst retailers net sold RM4m after net buying RM134m in the last four days.

TECHNICAL OUTLOOK: KLCI

After rebounding from a low of 1520 on 22 Sep to a high of 1549 yesterday, strong selling by foreigners saw the index dropping 10 pts to close at 1537.8 (-3.9% in Sep; +7.1% in Aug). Tracking overnight slump on Dow, expect the benchmark to face downward pressure with key support at 1520. A decisive fall below this level may trigger further slide towards 1483-1500 zones. On the upside, stiff resistances are pegged at 1558-1576 levels.

MARKET OUTLOOK

Mirroring overnight slump on Wall St, KLCI is expected to experience some selling pressure today. Major supports are situated at 1500-1520 zones (stiff resistances: 1558-1576), underpinned by the further reopening of economic sectors given the improvement in the local pandemic situation and positive news that Klang Valley will move to Phase 3 of NRP effective 1 Oct.

Source: Hong Leong Investment Bank Research - 1 Oct 2021